Seven Tips for Winning a Credit Card Dispute

You open your credit card bill and discover a charge that isn't yours.

Continue Reading Below

The solution might be as simple as a quick phone call or a short letter. However, the credit card dispute could involve a series of calls and correspondence and a little more time, depending on the situation.

Mistakes happen, says Howard Dvorkin, author of "Credit Hell: How to Dig Out of Debt," and founder of Consolidated Credit Counseling Services Inc.

"People just need to understand the law and how it affects them," he says. "And don't be afraid to dispute something."

The first question you want to answer: Was this a billing error or a case of credit card fraud or theft? While you may not care how the extra charges found their way onto your bill, it could make a difference in how you handle the dispute.

If it's a case of unauthorized usage, by law you're only liable for the first $50 in unauthorized credit card charges. Most card companies cap your liability at zero dollars if you report the charges soon after discovering them.

If you suspect someone has hijacked your card or card number, mention that in the call, cancel your old card and arrange for a replacement.

The issuer may even be able to keep a closer eye on your account for a period of time. You could also go through current charges to make certain all of them are yours.

In cases of unauthorized use -- where you suspect theft or fraud -- it can be helpful to file a police report (if possible) or fraud affidavit with the Federal Trade Commission, says Chi Chi Wu, staff attorney for the National Consumer Law Center.

What If It's a Merchant Error?

What if you think the charge on your credit card bill was a retailer's mistake -- not account fraud or theft?

The action you take is pretty much your call. You can try to straighten it out with the merchant. You can deal only with the credit card issuer. You can do a combination of both.

What you need to know: The law gives you 60 days from when you discover the billing error to notify your card issuer in writing of the error, says Lauren Bowne, staff attorney for Consumers Union.

Billing errors include such issues as a merchant double billing you or charging the wrong amount for a purchase.

That gives you some time, if you feel it might be easier to fix the problem through the merchant. "It makes sense to contact the merchant first to see if they'll fix the error," says Laureen France, investigator with the Federal Trade Commission. "And often they will."

If you're a good customer, "the merchant wants to keep you happy," says Dvorkin.

However, you're not required to talk to the retailer, Bowne says. If the merchant doesn't resolve your problem quickly -- issuing a permanent credit, not just promises -- contact your card issuer so you preserve your dispute rights. (Remember that 60-day clock.)

Writing to the Card Issuer

You've called your card issuer about an unauthorized charge or merchant billing mistake. Or you're still stuck with a billing error that the merchant failed to quickly correct.

Now it's time to write your card issuer.

Summarize the earlier phone call or attempt at resolution with names and dates, and state what you want the company to do. If you have any proof the charge wasn't really yours, include that.

However, you're not required to have proof to dispute a charge, says Ruth Susswein, deputy director of national priorities with Consumer Action.

When you're ready to send your letter, mail it certified with a return receipt requested. That will give you proof of the dates your letter was sent and received. Keep copies of any letters you send, along with any notes of the phone calls you made earlier.

Mail the letter to the address for billing disputes, not the billing address, says Susswein.

The issuer must acknowledge your credit card dispute and send written acknowledgement within 30 days of receiving your notice. Promptly complete any forms the issuer sends you and mail them back certified with a return receipt.

Your Rights and Responsibilities

Once you raise a dispute with your card issuer, it must investigate and get back to you within two complete billing cycles and no later than 90 days. While a charge is in dispute, you don't have to pay it -- though you do have to pay the undisputed portion.

The card company can't report you as late to the credit bureaus and can't charge interest on the disputed amount, says Wu.

Not paying the disputed amount also preserves your rights to challenge the error under "claims and defenses," says Bowne .

However, the card issuer can apply the disputed amount against your credit limit, according to the FTC's website. Disputing $3,000 in airline tickets on a card with a $10,000 credit limit would leave you with $7,000 in available credit until the dispute is resolved.

If the credit card dispute is resolved in your favor, the issuer should cancel the charge and associated interest.

If the dispute is not resolved in your favor, you'll be responsible for the charge and any interest that accumulated during the dispute period, says Susswein. At that point, if you don't pay, you risk hurting your credit, she says.

A Winning Hand

Do you want to hold a winning hand throughout the credit card dispute process?

In phone conversations, stay calm and never raise your voice -- even if the person on the other end of the phone does.

Do the same with the letters. Be organized, factual and polite. Avoid speculation. Act "like a civil adult," says France.

Be persistent "if it's a legitimate claim," she says. "Especially if it's a high-dollar claim, I wouldn't necessarily take the first 'no' as the final statement."

Asserting 'Claims and Defenses'

If a merchant made a mistake on your bill and you didn't catch it within two months of its appearance on your statement, you still have an option.

Even after the 60-day window for reporting a billing error to your card issuer, you have the right to ask for a correction of a merchant billing mistake and withhold payment of the disputed amount by citing "claims and defenses," says Bowne.

To do this, you must not have paid the disputed amount, says Bowne. As long as your balance has remained higher than the disputed amount, you've preserved your rights, she says.

How to do it: Even if you speak by phone, write a letter to the merchant outlining the mistake. Include copies of anything that proves your argument and ask the retailer to correct the problem.

Follow Up With Your Issuer

If you've asserted "claims and defenses" and the merchant refuses to budge, contact your card issuer.

"Give a call to get things rolling, and follow up with a letter," Bowne says.

In your letter, succinctly outline the problem and desired solution. Detail exactly how you've tried to resolve the credit card dispute with the retailer and any responses you received.

Invoking "claims and defenses" requires you to have made a "good faith" effort to work it out with the merchant first, says Bowne.

Include any copies of evidence that backs up your claim. "Just try to keep as much of a paper trail as you can," says Bowne.